KAMCO Investment Research. MENA Fixed Income Report

Transcription

1 KAMCO Investment Research MENA Fixed Income Report January 2015

2 MENA Fixed Income Report Table of Contents Table of Contents Section Contents Page 1 Global Economic Overview 3 2 MENA Economic Overview 10 3 Global Fixed Income Market 17 4 MENA Bond Market 27 5 MENA SUKUK Market 38 6 The Way Forward 48 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix B MENA Bond Pipeline Appendix C MENA SUKUK Issuances in 2014 Appendix D MENA SUKUK Pipeline

3 SECTION 1 Global Economic Overview SECTION 1 Global Economic Overview 3

4 SECTION 1 Global Economic Overview Global Growth Estimates: Supported by continuing recovery in high-income countries, low oil prices, and receding domestic headwinds in developing countries, World GDP is estimated to grow by 3.5% in 2015 & 3.7% in The US is expected to remain engine of global economic growth in 2015; Europe continue to be a risk factor. 6 5 World GDP Growth G4 Countries: Real GDP (%) US Euro-Zone Japan UK e 2015f 2016f World s Historical ( e) average GDP Growth is 3.60% e 2015f 2016f e 2015f 2016f World s Average forecasted GDP Growth is 3.87% e 2015f 2016f Source: IMF, World Bank, Capital Economics, KAMCO Research 4

5 SECTION 1 Global Economic Overview IMF Jan-2015 World Economic Outlook (Update) Global growth will receive a boost from lower oil prices, which reflects to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness, as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies. Global Economic Outlook Global growth increased broadly as expected to 3.75 percent in the third quarter of 2014, up from 3.25 percent in the second quarter. This masked marked growth divergences among major economies. The recovery in the United States was stronger than expected, while economic performance in all other major economies-most notably Japanfell short of expectations. US dollar appreciated approximately by 6 percent in real effective terms relative to the values used in IMF s Oct WEO. In contrast, the Euro and the Yen have depreciated by about 2 percent and 8 percent, respectively, and many emerging market currencies have weakened, particularly those of commodity exporters. Global growth in 2015 and 2016 is projected at 3.5% and 3.7%, downward revisions of 0.3% relative to the Oct World Economic Outlook (WEO). The revisions reflect a reassessment of prospects in China, Russia, the Euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices. The United States is the only major economy for which growth projections have been raised. Growth is projected to exceed 3 percent in , on the back of domestic demand supported by lower oil prices, a more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates. 5

6 SECTION 1 Global Economic Overview IMF Jan-2015 World Economic Outlook (Update).Cont d IMF World Economic Outlook Jan 2015 Projections (%) Chg from Oct Global Economic Outlook GDP Growth World Output US Euro Area Japan EM and Developing Economies Russia China India MENAP Saudi Arabia Source: IMF WEO Update January

7 SECTION 1 Global Economic Overview IMF Jan-2015 World Economic Outlook (Update).Cont d Euro area annual growth is projected at 1.2 percent in 2015 and 1.4 percent in Global Economic Outlook In the Emerging Market and developing economies, growth is projected to remain broadly stable at 4.3 percent in 2015 and to increase to 4.7 percent in 2016-a weaker pace than forecasted in the October 2014 WEO. Lower growth in China and its implications for Emerging Asia A much weaker outlook in Russia Downward revisions to potential growth in commodity exporters. Oil exporters that have accumulated substantial funds from past higher prices and have fiscal space can let fiscal deficits increase and draw on these funds to allow for a more gradual adjustment of public spending to the lower prices. The distribution of risks to global growth is more balanced than in Oct-14. The main upside risk is a greater boost from lower oil prices, although there is uncertainty about the persistence of the oil supply shock. Downside risks relate to shifts in sentiment and volatility in global financial markets, especially in emerging market economies, where lower oil prices have introduced external and balance sheet vulnerabilities in oil exporters. Stagnation and low inflation are still concerns in the euro area and in Japan. Interest rates and risk spreads have risen in many emerging market economies, notably commodity exporters, and risk spreads on high-yield bonds and other products exposed to energy prices have also widened. Long-term government bond yields have declined further in major advanced economies, reflecting safe haven effects. 7

8 SECTION 1 Global Economic Overview Global Asset Class Performance Global Asset Class Performance S&P Developed REIT US Dollar US Equities Japan Equities Europe Ex-UK Equities Global Bond MSCI Developed World Markets MSCI World US Cash Global Developed Sovereign Bonds Global High Yield Corp. Bond MSCI Arabian Markets Gold MSCI GCC UK Equities MSCI Emerging Market Global Natural Resource Equities MSCI MENA Commodities Oil -48.3% -33.1% -17.5% -10.2% -0.3% -1.4% -1.4% -2.2% -2.7% -4.6% 18.4% 12.8% 11.4% 7.1% 4.2% 3.8% 2.9% 2.1% 0.2% 0.1% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Source: Bloomberg 8

9 SECTION 1 Global Economic Overview International Credit Default Swaps (CDS): Russian CDS saw a spike on geopolitics and the decline in global oil prices International CDS Source: Bloomberg 9

10 SECTION 2 MENA Economic Overview SECTION 2 MENA Economic Overview 10

11 SECTION 2 MENA Economic Overview MENA Economic Outlook: MENA GDP growth is expected to see a slowdown and reach 3.0% in 2015 as compared to 3.5% in Oil price is expected to remain low during resulting in negative impact on the oil exporting economies. The positive expected growth for oil importers within the MENA region would somewhat offset this oil-led weakness. Saudi Arabia 2016f 2015f 2014e 2013a Egypt 2016f 2015f 2014e 2013a MENA Region : Real GDP Growth Kuwait UAE Qatar Oman 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a Algeria Morocco Tunisia Jordan 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a 2016f 2015f 2014e 2013a Bahrain 2016f 3.3 Lebanon 2016f f f e e a a 1.5 Source: IMF, World Bank, Capital Economics, KAMCO Research 11

12 SECTION 2 MENA Economic Overview Oil Prices: The OPEC oil basket saw further substantial drops during the early part of 2015 by around 19.9% or USD 10.4/b, to reach a low of USD 41.65/b as of 15 Jan 2015 and average around USD 46.5/b. The drop in oil prices will add pressure to the macro economic situation in the GCC as they might post a current account deficit in USD/b OPEC Brent Oil Prices Jan Feb Apr Jun-14 5-Aug Sep Nov Jan-15 GCC- Fiscal Breakeven Oil Prices (2015e) Kuwait 54.0 Fiscal Pressure Qatar UAE Oman KSA Current Oil Prices USD/B Bahrain Source: IMF, Bloomberg, KAMCO Research 12

13 SECTION 2 MENA Economic Overview MENA Real Interest Rates: The real interest rates in the MENA Region are either negative or too low UAE Saudi Arabia 3 CPI (YoY%) EIBO12M Index 4 CPI (YoY%) SIBB12M Index Interest Rates Egypt CPI (YoY%) EGDIMW Index Kuwait CPI (YoY%) KIBOR1Y Index Source: Bloomberg 13

14 SECTION 2 MENA Economic Overview MENA Sovereign Ratings: All the GCC countries are in the investment grade showing the strong credit standing and the strength in their economies Country S&P Moody's Fitch Abu Dhabi AA Aa2 AA Bahrain BBB Baa2 BBB Egypt B- Caa1 B Jordan BB- B1 NR Credit Ratings Kuwait AA Aa2 AA Lebanon B- B2 B Morocco BBB- Ba1 BBB- Oman A A1 NR Qatar AA Aa2 NR Saudi Arabia AA- Aa3 AA Tunisia NR Ba3 BB- Turkey BB+ Baa3 BBB- United Arab Emirates NR Aa2 NR Source: Bloomberg 14

15 SECTION 2 MENA Economic Overview MENA Credit Default Swaps (CDS): MENA CDS saw big spikes during the financial crisis period (Dubai debt issues) and later during the Arab spring. MENA CDS Source: Bloomberg 15

16 SECTION 2 MENA Economic Overview MENA Economic Outlook Growth in the developing countries in the MENA region is projected to pick up gradually to 3.5 percent in 2017, helped by a rebound in oil production among oil exporters and a modest recovery among oil importing economies. MENA Economic Outlook Following their sharp decline in 2014, oil prices are expected to remain soft in 2015 but rise modestly in the medium term. Among oil exporters, growth is expected to firm to about 3.1 percent by Among oil importers, the outlook is for a gradual improvement driving a growth of about 4.1 percent by A weak EU will have more impact on the North African economies as their growth is more tied to the EU trade. But the reforms in these North African countries will support growth. GCC can expect a huge decline in the current account surplus or report current account deficit in 2015 if the oil prices fail to see a rebound. We do not expect any fiscal tightening in GCC as economies are in a much better shape due to accumulated surplus built over the last decade. Geo-political issues still remain an overhang on the region. 16

17 SECTION 3 Global Fixed Income Market SECTION 3 Global Fixed Income Market 17

18 SECTION 3 Global Fixed Income Market Global Fixed Income Market Composition Total Debt Securities 100% 90% Non-Financial Corporations 80% 70% 60% General Government 50% 40% 30% 20% Financial Corporations 10% 0% Dec.89 Sep.91 Jun.93 Mar.95 Dec.96 Sep.98 Jun.00 Mar.02 Dec.03 Sep.05 Jun.07 Mar.09 Dec.10 Sep.12 Jun.14 Total Debt Securities - Amounts Outstanding (USD Trillion) Dec.89 Sep.91 Jun.93 Mar.95 Dec.96 Sep.98 Jun.00 Mar.02 Dec.03 Sep.05 Jun.07 Mar.09 Dec.10 Sep.12 Jun Source: Bank for International Settlements (BIS), KAMCO Research 18

19 SECTION 3 Global Fixed Income Market International Debt Securities: Global Bond Market is dominated by developed countries that account for the lion s share of the market. In terms of type of instruments, fixed rate instruments is the preferred choice. International Debt Securities Fixed rate 72% Total Mutual Fund Net Assets (USD Bn) Equityrelated 2% Global Bonds & Notes by Type Floating rate 26% Int. organisations 7% Latin America & Caribbean 3% Europe 2% Asia & Pacific 2% Africa & Middle East 1% Offshore centres 9% Developed countries 76% Q % of Total Equity 8,864 10,479 9,492 10,718 13,269 13, % Bond 4,544 5,389 5,793 6,980 7,084 7, % Money Market 5,317 4,995 4,695 4,793 4,760 4, % Balanced/Mixed 2,424 2,817 2,781 3,167 3,706 3, % Other 840 1,029 1,034 1,178 1,211 1, % All Reporting Countries 22,945 24,710 23,796 26,836 30,030 31, % Source: BIS, KAMCO Research 19

20 Jan-88 Oct-88 Jul-89 Apr-90 Jan-91 Oct-91 Jul-92 Apr-93 Jan-94 Oct-94 Jul-95 Apr-96 Jan-97 Oct-97 Jul-98 Apr-99 Jan-00 Oct-00 Jul-01 Apr-02 Jan-03 Oct-03 Jul-04 Apr-05 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14 Jan-15 SECTION 3 Global Fixed Income Market Equities Vs. Bonds Returns MSCI World Index JPM Global Agg. Bond Index Returns Source: Bloomberg, KAMCO Research 20

21 SECTION 3 Global Fixed Income Market Bond Indices Historical Performance 20% 40% 15% 30% 20% 10% 10% Bond Indices 5% 0% -5% 0% -10% -20% -30% -40% -10% Bloomberg Global Developed Sovereign Bond Index Bloomberg Global Investment Grade Corporate Bond Index Bloomberg Global High Yield Corporate Bond Index Bloomberg USD Emerging Market Composite Bond Index Bloomberg US Treasury Bond Index -50% Barclays Capital Bond Composite Global Index JPM Global Aggregate Bond Inded - TR Unhedged USD S&P 500 Index MSCI World Index Source: Bloomberg 21

22 SECTION 3 Global Fixed Income Market Key Interest Rates Developed Markets: The yields in the developed markets went further down as the investors preferred safety. Interest Rates USA Dec-14 Dec-13 Change Fed Discount Rate Year Bond Year Bond Year Bond Year Bond Year Bond USD/EUR % Japan Dec-14 Dec-13 Change BoJ Discount Rate Year Bond Year Bond Year Bond Year Bond Year Bond JPY/USD % Euro Dec-14 Dec-13 Change ECB Refinancing Rate Year Bund Year Bund Year Bund Year Bund Year Bund EUR/USD % UK Dec-14 Dec-13 Change BoE Official Rate Year UK Gilt Year UK Gilt Year UK Gilt Year UK Gilt Year UK Gilt GBP/USD % Source: Bloomberg 22

23 SECTION 3 Global Fixed Income Market Yields Movement 2014: Yields went down as the investors preferred government securities Janet Yellen approved to lead Fed ECB Slashes Rates Crimean Crisis China Rate Cut Interest Rates Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan US 10-Year Bond Rate (LHS) Eurozone 10-Year Bond Rate (RHS) Source: Bloomberg, KAMCO Research 23

24 SECTION 3 Global Fixed Income Market US Interest Rates: Expectations of a rise in yields as the Fed increases the interest rates 4.5 Central Bank Rate (%) 3-Month Rate (%) 2-Year Note (%) 10-Year Note (%) 30-Year Note (%) US Interest Rates Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Source: Bloomberg 24

25 SECTION 3 Global Fixed Income Market Appropriate pace of policy firming: Market expects Fed to start raising the rates sometime during the 2 nd half of Fed Dot Plot Note: each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual participant s judgment of the midpoint of the appropriate target range for the federal funds rate or the appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run. Source: US Federal Reserve Board of Governors 25

26 SECTION 3 Global Fixed Income Market Global Fixed Income Market Outlook US Fed is likely to raise interest rates by the end of However, a strong dollar will negatively affect growth estimates. U.S. treasury yields have been low because of investors flight towards safe haven but we expect the yields to move higher in Global Fixed Income Market Deflationary pressures will continue in the developed economies especially in EU and Japan; Bank of Japan and ECB asset purchase program to take over from Fed. Yields on long terms 10-year Bund will remain low for 2015 as fiscal growth does not look likely in Major forces that are driving Global Fixed Income Markets: Low commodity prices (specially energy prices) Low interest rates Increasingly divergent monetary policies across major economies o Swiss National Bank removed the ceiling on the Swiss franc and cut the target range for Libor from -0.25% to -0.75%. o The Central Bank of Russia took drastic action, hiking its policy rate by 650bp to 17.0%. o India s/china Central bank cut interest rates. High Yield bond market has more exposure to Energy companies and low oil prices can cause yield movements sharply. 26

27 SECTION 4 MENA Bond Market SECTION 4 MENA Bond Market 27

28 SECTION 4 MENA Bond Market Composition of Global Asset Class: Bonds Constitutes a miniscule portion of total assets in the MENA Region as compared to other world economies. Composition 100% 80% 60% 40% 20% 0% 42.6% 35.3% 22.1% Equity Market Capitalization Total Debt Securities Bank Assets 51.2% 34.3% 14.4% 23.8% 46.9% 29.3% 65.7% 16.8% 43.3% 17.5% 16.3% 40.4% 37.2% 39.6% 18.3% 44.5% World European Union North America Asia Japan Newly industrialized Asian economies 37.5% 23.0% Latin America and the Caribbean 58.8% 7.2% 34.0% MENA Debt as % of GDP 300% 250% 200% 150% 100% 50% 0% 250% 210% 185% Debt as a % of GDP 134% 109% Japan North America European Union World Newly industrialized Asian economies 62% Latin America and the Caribbean 42% Asia 8% MENA Source: IMF Global Financial Stability Report (Oct-14), KAMCO Research 28

29 SECTION 4 MENA Bond Market MENA Interest Rates: Rates expected to move northwards, but the spreads might tighten M US LIBOR 3M KIBOR 3M SAIBOR 3M EIBOR MENA Interest Rates As the regional currencies are pegged to USD, we expect the rates to move in line with the US Rates Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Source: Bloomberg 29

30 SECTION 4 MENA Bond Market MENA Bond Market: Post the financial crisis there has been a strong growth in bond issuances which peaked in Q with total issuances amounting to USD 27.2 Bn during the quarter. MENA Bonds Quarterly Bonds Issuances Yearly Issued Bonds (USD Bn) Q1-00 Q3-00 Q1-01 Q3-01 Value (USD Bn) Q1-02 Q3-02 Q1-03 Q3-03 Q1-04 No. of Issues Q3-04 Q1-05 Q3-05 Q Q Q1-07 Q3-07 Q1-08 Q3-08 Q Q Q Q Q1-11 Q Q Q Q1-13 Q Q Q Source: Zawya 30

31 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 SECTION 4 MENA Bond Market MENA Bond Market: Egypt and UAE have led the region in bond issuances during 2014 MENA Bonds by Country UAE Bond Index Egypt UAE Jordan Qatar Kuwait Morocco Bahrain USD Bn Bloomberg USD UAE Composite Liquid Index 98 S&P MENA Bond Index S&P MENA Bond & Sukuk Index 96 Dec-12 Feb-13 Mar-13 Apr-13 Jun-13 Jul-13 Aug-13 Oct-13 Nov-13 Dec-13 Feb-14 Mar-14 Apr-14 Jun-14 Jul-14 Aug-14 Oct-14 Nov-14 Dec-14 Jan-15 Source: Zawya, Bloomberg, KAMCO Research 31

32 SECTION 4 MENA Bond Market MENA Bond Issuances 2014: Sovereign bond issuances dominated the primary bond market Total Size of Issues (USD Bn) Number of Issues 120 Breakdown by Issuer Type By Market Egypt SE 13.3 Irish SE 8.0 Amman SE 4.1 Luxembourg SE Muscat SM Palestine SE Casablanca SE Tokyo SE Singapore SE Tunis SE SIX Over The Counter NASDAQ Dubai Ltd London SE Frankfurt SE Sovereign 70% Corporate 27% Quasi Sovereign 3% By Sector Gov. Inst Financials Total Size of Issues (USD Bn) Number of Issues Agriculture Tourism Retail Oil and Gas Utilities Real Estate Transport Industrials Telecom Breakdown by Market Type Int l 34% Domestic 66% Source: Zawya, KAMCO Research 32

33 SECTION 4 MENA Bond Market MENA Bonds League Table Rank Lead Manager Number of Issues Total Amount (USD Bn) Market Share (%) 1 Ministry of Finance - Egypt % 2 HSBC Bank % League Table 3 Central Bank of Jordan % 4 JPMorgan Chase Bank - Bahrain % 5 The Bank of Tokyo - Mitsubishi UFJ Limited % 6 National Bank of Abu Dhabi PJSC % 7 Deutsche Bank AG % 8 Standard Chartered Bank % 9 Qatar Central Bank % 10 Goldman Sachs International - UAE % Source: Zawya 33

34 SECTION 4 MENA Bond Market MENA Bonds - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) National Bank of Abu Dhabi PJSC NBADUH 4 1/4 03/25/15 25-Mar Financials Banque Saudi Fransi BSFR 4 1/4 03/30/15 30-Mar Financials Bahrain Mumtalakat Holding Co BSC MUMTAK 5 06/30/15 30-Jun Financials Nile Finance Ltd NILEFN 5 1/4 08/05/15 5-Aug Financials BBK BSC BBK 4 1/2 10/28/15 28-Oct Financials SABIC Capital I BV SABIC 3 11/02/15 2-Nov-15 1, Materials MENA Bond Yields QNB Finance Ltd QNBK 3 1/8 11/16/15 16-Nov-15 1, Financials MDC-GMTN B.V. MUBAUH 3 3/4 04/20/16 20-Apr Government IPIC GMTN Ltd INTPET 4 7/8 05/14/16 14-May-16 1, Government Emirates Airline EMIRAT 5 1/8 06/08/16 8-Jun-16 1, Consumer Ooredoo International Finance Ltd QTELQD 3 3/8 10/14/16 14-Oct-16 1, Telecom Kuwait Projects Co KWIPKK 8 7/8 10/17/16 17-Oct Financials Dubai Electricity & Water Authority DEWAAE 6 3/8 10/21/16 21-Oct Utilities Abu Dhabi National Energy Co TAQAUH 5 7/8 10/27/16 27-Oct-16 1, Utilities Dubai Holding Commercial Operations DUBAIH 6 02/01/17 1-Feb Financials Doha Finance Ltd DHBKQD 3 1/2 03/14/17 14-Mar Financials CBQ Finance Ltd COMQAT 3 3/8 04/11/17 11-Apr Financials First Gulf Bank PJSC FGBUH /09/17 9-Oct Financials Abu Dhabi National Energy Co TAQAUH /25/17 25-Oct Utilities Investcorp SA INVBNK 8 1/4 11/01/17 1-Nov Financials Source: Bloomberg 34

35 SECTION 4 MENA Bond Market MENA Bonds - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) GIC Funding Ltd GULF 3 1/4 11/28/17 28-Nov Financials Gulf International Bank BSC GULINT 2 3/8 12/11/17 11-Dec Financials Abu Dhabi National Energy Co TAQAUH 2 1/2 01/12/18 12-Jan Utilities QNB Finance Ltd QNBK 2 1/8 02/14/18 14-Feb-18 1, Financials Bank Muscat SAOG BKMBOM 2 1/2 03/26/18 26-Mar Financials Credit Immobilier et Hotelier CIHMC /21/18 21-Apr Financials MENA Bond Yields IPIC GMTN Ltd INTPET 2 3/8 05/30/18 30-May-18 1, Government Abu Dhabi National Energy Co TAQAUH 7 1/4 08/01/18 1-Aug Utilities AKCB Finance Ltd ALKHAL 3 1/4 10/22/18 22-Oct Financials QNB Finance Ltd QNBK 2 3/4 10/31/18 31-Oct Financials BMCE Bank BMCE 6 1/4 11/27/18 27-Nov Financials Kuwait Projects Co KWIPKK /05/19 5-Feb Financials Dolphin Energy Ltd DOLNRG /15/19 15-Jun Energy Emirates Telecommunications Corp ETISLT 2 3/8 06/18/19 18-Jun Telecom RAKFunding Cayman Ltd RAKBNK 3 1/4 06/24/19 24-Jun Financials MAF Global Securities Ltd MAFUAE 5 1/4 07/05/19 5-Jul Financials National Bank of Abu Dhabi PJSC NBADUH 3 08/13/19 13-Aug Financials ADCB Finance Cayman Ltd ADCBUH 2 3/4 09/16/19 16-Sep Financials Abu Dhabi National Energy Co TAQAUH 6 1/4 09/16/19 16-Sep Utilities CBQ Finance Ltd COMQAT 7 1/2 11/18/19 18-Nov Financials Source: Bloomberg 35

36 SECTION 4 MENA Bond Market MENA Bonds - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) USB Bank PLC USBCY 7 1/2 12/31/19 31-Dec Financials Batelco International Finance No. 1 BATELC 4 1/4 05/01/20 1-May Financials Kuwait Projects Co KWIPKK 9 3/8 07/15/20 15-Jul Financials Burgan Finance No. 1 Jersey Ltd BGBKKK 7 7/8 09/29/20 29-Sep Financials Dubai Electricity & Water Authority DEWAAE 7 3/8 10/21/20 21-Oct-20 1, Utilities SABIC Capital I BV SABIC 2 3/4 11/20/20 20-Nov-20 1, Materials MENA Bond Yields MDC-GMTN B.V. MUBAUH 5 1/2 04/20/21 20-Apr Government Byblos Bank SAL BYBLB 7 06/24/21 24-Jun Financials Abu Dhabi National Energy Co TAQAUH 5 7/8 12/13/21 13-Dec Utilities Abu Dhabi National Energy Co TAQAUH 3 5/8 01/12/23 12-Jan-23 1, Utilities Ooredoo International Finance Ltd QTELQD 3 1/4 02/21/23 21-Feb-23 1, Telecom ADCB Finance Cayman Ltd ADCBUH 4 1/2 03/06/23 6-Mar Financials Emirates NBD PJSC EBIUH 4 7/8 03/28/23 28-Mar Financials ADCB Finance Cayman Ltd ADCBUH 3 1/8 05/28/23 28-May Financials IPIC GMTN Ltd INTPET 3 5/8 05/30/23 30-May-23 1, Government Abu Dhabi National Energy Co TAQAUH 3 7/8 05/06/24 6-May Utilities ICD Funding Ltd INVCOR 4 5/8 05/21/24 21-May Financials DP World Ltd DPWDU 1 3/4 06/19/24 19-Jun-24 1, Industrials Emirates Airline EMIRAT 4 1/2 02/06/25 6-Feb Consumer Emirates Telecommunications Corp ETISLT 2 3/4 06/18/26 18-Jun-26 1, Telecom Source: Bloomberg 36

37 SECTION 4 MENA Bond Market MENA Bonds - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) Abu Dhabi National Energy Co TAQAUH 6 1/2 10/27/36 27-Oct Utilities DP World Ltd DPWDU /02/37 2-Jul-37 1, Industrials IPIC GMTN Ltd INTPET 6 7/8 11/01/41 1-Nov Government Ooredoo International Finance Ltd QTELQD 4 1/2 01/31/43 31-Jan Telecom Burgan Tier 1 Financing Ltd BGBKKK 7 1/4 09/30/49 Perp Financials MAF Global Securities Ltd MAFUAE 7 1/8 10/29/49 Perp Financials MENA Bond Yields Emirates NBD 2014 Tier 1 Ltd EBIUH 6 3/8 12/17/49 Perp Financials Source: Bloomberg 37

38 SECTION 5 MENA SUKUK Market SECTION 5 MENA SUKUK Market 38

39 SECTION 5 MENA SUKUK Market MENA SUKUK Market: SUKUK market has been gaining strength in the region since 2011 MENA SUKUK Quarterly SUKUK Issuances Yearly Issued SUKUK (USD Bn) Q1-02 Q3-02 Q1-03 SUKUK Value (USD Bn) Q3-03 Q1-04 Q3-04 Q1-05 Q Q Q No. of Issues Q Q Q Q Q Q Q Q Q Q Q Q3-12 Q Q Q Q Source: Zawya 39

40 SECTION 5 MENA SUKUK Market MENA SUKUK Structure: Saudi dominates the primary market ; Ijara is the preferred structure By Country & Currency By Structure Bahrain Saudi UAE Qatar Oman Kuwait 7.6 Size of Sukuk issuance by Country (USD Bn) Ijarah Al-Wakala Bel- Istithmar 2.9 Wakala Modarabah- Murabaha Modarabah USD USD Bn Al-Istithmar Al Salaam 1.1 EUR Murabaha BHD QAR 3.0 SAR Musharaka 0.0 Source: Zawya, KAMCO Research 40

41 SECTION 5 MENA SUKUK Market Global SUKUK Issuances 2014: Malaysia leader in the Global Islamic Fixed income products By Country By Sector Malaysia Gov. Inst. Saudi A. Financials Total Size of Issues (USD bn) USA Hong Kong Brunei Pakistan Bahrain Qatar Turkey Indonesia UAE Total Size of Issues (USD bn) Telecom Education Services Transport Real Estate Construction Utilities Number of Issues Maldives Gambia Japan Senegal Luxembourg UK South Africa Singapore Number of Issues Food Retail Agriculture Oil and Gas Health Care Conglomerates Corporate 22% Breakdown by Issuer Type Quasi Sovereign 15% Int'l 24% Sovereign 63% Breakdown by Market Type Domestic 76% Source: Zawya, KAMCO Research 41

42 SECTION 5 MENA SUKUK Market Global SUKUK Issuances 2014: After Malaysian Ringgit, USD is the preferred currency of issuance By Market By Sector Nasdaq Dubai Total Size of Issues (USD bn) Hong Kong SE Singapore SE Luxembourg SE London SE Borsa Istanbul Bursa Malaysia Irish SE Dubai FM Number of Issues Maldives SE Indonesia SE Channel Islands Karachi SE LFX (Labuan) Total Size of Issues (USD Bn) MYR Total Size of Issues (USD Bn) GBP PKR EUR BND TRY BHD QAR IDR SAR USD Number of Issues Number of Issues XOF SGD GMD JPY MVR Source: Zawya, KAMCO Research 42

43 SECTION 5 MENA SUKUK Market SUKUK Benchmark Index Performance 110 Dow Jones Sukuk Index S&P MENA Sukuk TR Index 108 SUKUK Returns Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Source: Bloomberg 43

44 SECTION 5 MENA SUKUK Market SUKUK Market Forecast SUKUK Markets is expected to show strong growth over the medium term as the demand for Islamic financial products increase across the world spurring the corporates and financial institutions to bring out more SUKUKs and will also lead to product innovation. Currently Islamic investors have little choice in Fixed income products for effective asset allocation and diversification. However, we expect this to change with more SUKUK issuances and SUKUK Funds. SUKUK Market Forecast Following the market needs, GCC Region is expected to take the lead in SUKUK demand and supply. Amounts in USD billion Percentage Sukuk Growth -48% 15% 15% 10% 10% 10% 10% 10% Total Global Sukuk Issued Total Global Sukuk Matured Total Global Sukuk Outstanding Total Sukuk Demand ,102.6 Sukuk Supply & Demand Gap Source: Thomson Reuters 44

45 SECTION 5 MENA SUKUK Market SUKUK League Tables Rank Lead Managers Market Share (%) Total Amount (USD Bn) Number of Issues League Tables 1 Bank Negara Malaysia 63.98% CIMB Investment Bank Bhd 7.56% HSBC Bank Middle East Ltd. 5.94% Maybank Investment Bank Bhd 5.04% Standard Chartered Bank 4.27% Qatar Central Bank 3.35% RHB Islamic Bank Bhd 2.69% NBAD 2.57% Aminvestment Bank Group 2.46% Bank Indonesia 2.15% Total Top Rank Non-Central Banks Market Share (%) Total Amount (USD Bn) Number of Issues 1 CIMB Investment Bank Bhd 7.56% HSBC Bank Middle East Ltd. 5.94% Maybank Investment Bank Bhd 5.04% Standard Chartered Bank 4.27% RHB Islamic Bank Bhd 2.69% NBAD 2.57% Aminvestment Bank Group 2.46% Emirates NBD Capital Ltd. 1.86% Citigroup Global Markets Ltd 1.49% Kuwait Finance House 1.27% Total Top Source: Zawya 45

46 SECTION 5 MENA SUKUK Market MENA SUKUK - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) Dar Al-Arkan International Sukuk Co II DARALA 10 3/4 02/18/15 18-Feb Financials QIB Sukuk Funding Ltd QIBKQD /07/15 7-Oct Financials FGB Sukuk Co Ltd FGBUH /02/16 2-Aug Financials Emaar Sukuk Ltd EMAAR 8 1/2 08/03/16 3-Aug Financials Anka a Sukuk ltd NAKHL 10 08/25/16 25-Aug-16 1, Financials MENA SUKUK Yields Dar Al-Arkan Sukuk Co Ltd DARALA 5 3/4 11/25/16 25-Nov Financials FGB Sukuk Co Ltd FGBUH /18/17 18-Jan Financials Tamweel Funding III Ltd TAMWEE /18/17 18-Jan Financials Saudi Electricity Global Sukuk Co SECO /03/17 3-Apr Utilities Dubai DOF Sukuk Ltd DUGB /02/17 2-May Government BSF Sukuk Ltd BSFR /22/17 22-May Financials DP World Sukuk Ltd DPWDU 6 1/4 07/02/17 2-Jul-17 1, Industrials QIB Sukuk Ltd QIBKQD 2 1/2 10/10/17 10-Oct Financials DEWA Sukuk 2013 Ltd DEWAAE 3 03/05/18 5-Mar-18 1, Utilities SIB Sukuk Co III LTD SIB /16/18 16-Apr Financials CBB International Sukuk Co SPC BHRAIN /22/18 22-Nov Government Sukuk Funding No 3 Ltd ALDAR /03/18 3-Dec Financials Ooredoo Tamweel Ltd QTELQD /03/18 3-Dec-18 1, Telecom Alpha Star Holding LTD DAMACR /09/19 9-Apr Financials Dar Al-Arkan Sukuk Co Ltd DARALA 6 1/2 05/28/19 28-May Financials Source: Bloomberg 46

47 SECTION 5 MENA SUKUK Market MENA SUKUK - Yield and Duration (as of 19 Jan 2015) Issuer Name Security Name Maturity Date Amount Outstanding (USD Mn) Coupon Sector Yield to Maturity (Mid) Modified Duration (Mid) Emaar Sukuk Ltd EMAAR /18/19 18-Jul Financials Al Shindagha Sukuk Ltd FLYDU /26/19 26-Nov Consumer ICD Sukuk Co Ltd INVCOR /21/20 21-May Financials Bahrain Mumtalakat Holding Co BSC MUMTAK 4 11/25/21 25-Nov Financials Saudi Electricity Global Sukuk Co SECO /03/22 3-Apr-22 1, Utilities MENA SUKUK Yields SoQ Sukuk A Q.S.C QATAR /18/23 18-Jan-23 2, Government Medjool Ltd EMIRAT 3 7/8 03/19/23 19-Mar Consumer Saudi Electricity Global Sukuk Co 2 SECO /08/23 8-Apr-23 1, Utilities EMG SUKUK Ltd EMAARM /18/24 18-Jun Financials Sharjah Sukuk Ltd SHARSK /17/24 17-Sep Government DIFC Sukuk Ltd DIFCAE /12/24 12-Nov Financials Dubai DOF Sukuk Ltd DUGB 5 04/30/29 30-Apr Government Saudi Electricity Global Sukuk Co 2 SECO /08/43 8-Apr-43 1, Utilities Saudi Electricity Global Sukuk Co 3 SECO 5 1/2 04/08/44 8-Apr-44 1, Utilities DIB Tier 1 Sukuk Ltd DIBUH 6 1/4 03/29/49 29-Mar-49 1, Financials AHB Tier 1 Sukuk Ltd ALHILA 5 1/2 06/29/49 29-Jun Financials DIB Tier 1 Sukuk 2 Ltd DIBUH 6 3/4 07/29/49 29-Jul-49 1, Financials Source: Bloomberg 47

48 SECTION 6 The Way Forward SECTION 6 The Way Forward 48

49 SECTION 6 The Way Forward Benefits of Debt Capital Markets Debt Capital Markets Access to international sources of capital in addition to diversification of fund sources for businesses Increase in choice for the investors for diversification and efficient asset allocation More value generated by the financial sector; job creation Funding for economic growth and mega infrastructure projects 49

50 SECTION 6 The Way Forward Need for Vibrant MENA Fixed Income Market A robust corporate bond market can act as a source of stability, particularly during periods of financial stress, where the freezing up of credit markets are common. MENA Fixed Income Market The development of deep and liquid corporate bond markets will help reduce reliance on bank financing and lead to greater diversification of the sources of funding across various asset classes. The corporate bond market also helps to reduce the risk of currency and funding mismatches, particularly for projects with long gestation periods. The development of an efficient corporate bond market offers several additional benefits for issuers, investors and the overall economy Governments will have to lead the market in terms of issuing bonds for all maturities, so that there can be a yield curve which can be used to price other fixed income securities. Provides an asset class for portfolio diversification, particularly for investors with long-term liabilities; Enables corporations to reduce their financing costs and provides for a more efficient allocation of savings. 50

51 SECTION 6 The Way Forward Challenges Facing the Fixed Income Market (Bonds & SUKUK) Lack of Liquidity Regulatory + Legal Framework Yield Curve and Lack of Benchmark Challenges Challenges Limited Secondary Market Lack of Transparency Lack of Standardization (Sukuk) 51

52 SECTION 6 The Way Forward Investors need a well diversified portfolio Color Asset Class Represented by Allocation Return (%) Std Dev (%) Return/Risk S&P 500 (US Stocks) S&P 500 Index 10% 10.2% 18.4% 0.55 Gold Gold Spot price 10% 4.8% 15.3% 0.32 Russell 1000 (Large Cap Value) Russell 1000 Index Total Return 10% 10.5% 18.6% 0.56 Emerging Markets MSCI Daily TR Gross Emerging Markets EM Local 10% 19.8% 48.9% 0.40 Diversification Benefits Commodities The S&P GSCI Total Return Index 10% 1.2% 25.7% 0.05 Non-US=EAFE (Non-US Stocks) MSCI Daily TR Gross EAFE USD Index 10% 6.1% 19.9% 0.30 Cash S&P/BGC 3-6M US TBill Total Return Index 10% 3.3% 2.4% 1.40 Bonds - Agg Barclays US Agg Total Return Value Unhedged USD Index 10% 6.4% 5.0% 1.29 REITs FTSE NAREIT All REITs Index 10% 5.0% 18.1% 0.28 US Treasuries iboxx USD Treasuries Total Return Index 10% 3.2% 5.8% 0.56 Portfolio Cumulative : 497.9% 100% 7.7% 10.5% 0.74 Diversification is among the best strategies for investors for their long term investment goals. Fixed Income securities, although recorded lower relative returns, reduces the volatility of the portfolio. Through efficient asset allocation and managing risk return trade-off investor can meet their investment goals. Source: Bloomberg, KAMCO Research 52

53 SECTION 6 The Way Forward Diversification Benefits Investors need a well diversified portfolio Color Asset Class Allocation Return (%) Std Dev (%) Return/Risk S&P 500 (US Stocks) 10% 10.2% 18.4% 0.55 Gold 10% 4.8% 15.3% 0.32 Russell 1000 (Large Cap Value) 10% 10.5% 18.6% 0.56 Emerging Markets 10% 19.8% 48.9% 0.40 Commodities 10% 1.2% 25.7% 0.05 Non-US=EAFE (Non-US Stocks) 10% 6.1% 19.9% 0.30 Cash 10% 3.3% 2.4% 1.40 Bonds - Agg 10% 6.4% 5.0% 1.29 REITs 10% 5.0% 18.1% 0.28 US Treasuries 10% 3.2% 5.8% 0.56 Portfolio Cumulative : 497.9% 100% 7.7% 10.5% 0.74 Asset Class Returns ( ) Cumulative = 603.5% Average = 8.5% Std Dev = 10.3% Return/Risk = Emerging M arkets Large Cap Value 33 US Stocks 30.5 REITs 23.1 Bonds 16 Non-US Stocks 12.5 Cash 6.9 Emerging M arkets 64.8 Large Cap Value 8.9 US Stocks 7.6 Bonds 7.4 Comdty 4.4 Cash 4.1 REITs 2.9 Emerging M arkets Non-US Stocks 32.9 Gold 17.4 REITs 10.6 Large Cap Value 10.2 US Stocks 10.1 Bonds 9.7 Emerging M arkets 27.7 Non-US Stocks 8.1 Comdty 5.3 Cash 4.2 US Stocks 1.3 Large Cap Value 0.4 Gold -1.9 Large Cap Value 37.8 US Stocks 37.6 Comdty 20.3 Bonds 18.5 Non-US Stocks 11.6 REITs 9.1 Cash 6.5 Comdty 33.9 REITs 26.5 US Stocks 23 Large Cap Value 22.4 Emerging M arkets 13.5 Non-US Stocks 6.4 Cash 5.5 US Stocks 33.4 Large Cap Value 32.9 REITs 11.8 Bonds 9.7 Cash 5.6 Emerging M arkets 4.8 Non-US Stocks 2.1 US Stocks 28.6 Large Cap Value 27 Non-US Stocks 20.3 Bonds 8.7 Cash 5.5 Gold 0.2 Emerging M arkets Emerging M arkets 77.9 Comdty 40.9 Non-US Stocks 27.3 US Stocks 21 Large Cap Value 20.9 Cash 4.8 Gold 0.1 Comdty 49.7 REITs 15.9 US Treasuries 13.3 Bonds 11.6 Cash 6.3 Gold -5.5 Large Cap Value -7.8 Bonds 8.4 Emerging M arkets 7.9 REITs 7 US Treasuries 6.9 Cash 5 Gold 2.5 US Stocks because it is difficult to time the market and worth noting that there is a golden period for each asset class which might not get replicated! Comdty 32.1 Gold 24.7 US Treasuries 11.5 Bonds 10.3 Cash 2 REITs -2.2 Emerging M arkets -7.1 Emerging M arkets 46.7 Non-US Stocks 39.2 Large Cap Value 29.9 REITs 29.3 US Stocks 28.7 Comdty 20.7 Gold 19.3 REITs 22.9 Non-US Stocks 20.7 Comdty 17.3 Emerging M arkets 16.4 Large Cap Value 11.4 US Stocks 10.9 Gold 5.5 Emerging M arkets 35.8 Comdty 25.6 Gold 18 Non-US Stocks 14 Large Cap Value 6.3 US Stocks 4.9 Cash 3.1 Emerging M arkets 28.8 REITs 28.3 Non-US Stocks 26.9 Gold 23 US Stocks 15.8 Large Cap Value 15.5 Cash 4.8 Emerging M arkets 33.6 Comdty 32.7 Gold 31 Non-US Stocks 11.6 US Treasuries 9 Bonds 7 Large Cap Value 5.8 US Treasuries 14.9 Bonds 5.2 Gold 5.1 Cash 3 US Stocks -37 Large Cap Value REITs -41 Emerging M arkets 62.8 Non-US Stocks 32.5 Large Cap Value 28.4 US Stocks 26.5 Gold 25.5 REITs 19.9 Comdty 13.5 Gold 29.1 REITs 21.8 Large Cap Value 16.1 US Stocks 15.1 Emerging M arkets 14.4 Comdty 9 Non-US Stocks 8.2 Gold 11.1 US Treasuries 9.9 Bonds 7.8 REITs 2.4 US Stocks 2.1 Large Cap Value 1.5 Cash 0.2 Non-US Stocks 17.9 Emerging M arkets 17.4 Large Cap Value 16.4 US Stocks 16 REITs 15 Gold 6.3 Bonds 4.2 Large Cap Value 33.1 US Stocks 32.4 Non-US Stocks 23.3 Emerging M arkets 3.8 Cash 0.1 REITs -1.2 Comdty -1.2 REITs 21.9 US Stocks 13.7 Large Cap Value 13.2 US Treasuries 6.1 Bonds 6 Emerging M arkets 5.6 Cash 0.1 Comdty -6.1 Gold -5.7 Cash 3.4 Bonds -2.9 Gold 1 Bonds 3.6 Comdty REITs Bonds -0.8 US Stocks -9.1 Large Cap Value Non-US Stocks Bonds 4.1 Bonds 4.3 US Treasuries 2.8 Bonds 4.3 US Stocks 5.5 Non-US Stocks Bonds 5.9 Bonds 6.5 Comdty -1.2 US Treasuries 2 Bonds -2 Gold -1.4 Gold -7.7 Non-US Stocks Comdty REITs -6.4 Emerging M arkets 0.8 Gold -4.6 Gold Comdty US Treasuries -2.4 Non-US Stocks -14 Non-US Stocks Large Cap Value US Treasuries 2.3 US Treasuries 3.5 REITs 2.5 US Treasuries 3.1 Cash 5.4 Emerging M arkets Cash 0.4 US Treasuries 5.8 Non-US Stocks Cash 0.2 US Treasuries -3.4 Non-US Stocks -4.5 REITs Emerging M arkets Comdty US Stocks Cash 1.2 Cash 1.3 Bonds 2.4 Comdty REITs Comdty US Treasuries -4.5 Cash 0.2 Emerging M arkets Comdty 0.1 Gold Comdty Source: Bloomberg, KAMCO Research 53

54 VIX Index VXTYN Index SECTION 6 The Way Forward Global Asset Class Volatility: Bonds are less volatile than equities and are appealing to the investors who are risk averse. MENA Investors need a strong and regulated bond market for efficient allocation of their capital VIX Index VXTYN Index Volatility Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 VIX Index (The Chicago Board Options Exchange Volatility Index) reflects a market estimate of future volatility in the equity market. VXTYN Index (CBOE CBOT 10 year U.S. Treasury Note Volatility Index) reflects volatility in the bond market. Source: Bloomberg 54

55 SECTION 6 The Way Forward MENA Markets Volatility: MENA markets witnessed higher volatility during 2014 as seen in the number of days where the markets had an upside/downside movement of more than 2%. This is especially the case in Dubai market where on 41 days the market had a movement of more than 3% during the year. Days % Absolute Daily Change 2-3% Absolute Daily Change >3% Absolute Daily Change 140 MENA Equity Markets Volatility Tadawul DFM KSE Weighted EGX 30 Source: KAMCO Research 55

56 SECTION 6 The Way Forward Global Asset Class Correlation Matrix: Due to lower correlation between different asset classes, MENA investors need a strong bond market so they can make use of the diversification benefits in their asset allocations by investing in Bonds/Bond Funds. Correlation MSCI World Equities MSCI EM Equities Commodities Developed REITS Oil MSCI GCC Equities Gold Global Bond USD Index MSCI World Equities Global Asset Class Correlation MSCI EM Equities Commodities Developed REITS Oil MSCI GCC Equities Gold Global Bond USD Index Since 2009 Source: Bloomberg, KAMCO Research 56

57 SECTION 6 The Way Forward Need for Bond Funds in MENA A strong secondary market is needed to complement the primary market of fixed income securities in the region. As of now the region s Fixed Income markets is basically Buy and Hold with no active trading. An institutionalized and regulated market will get benefit from Bond Funds as the fund manager take advantage of market inefficiencies to provide additional returns to the investors. Under served Market Bonds 24% Global Mutual Fund Assets By Type Of Fund as of Q3-14 Money Market 14% Balanced- Mixed 13% Other Assets 5% Saudi Arabia Mutual Fund Assets By Type Of Fund as of Q3-14 Money Market 53% Other Assets 3% Bonds 5% Real Estate Investments 3% Equity 44% Equity 36% Source: ICI, SAMA, KAMCO Research 57

58 SECTION 6 The Way Forward Projects Planned in MENA Region: Promoting the need for longer tenor Fixed Income Financing. MENA Projects 1,200 1, , Projects Planned or Under Way in the GCC (USD Mn) 514 As most of the projects are in the infrastructure sector with long gestation periods, they can be financed with longer duration bonds which will help in making the effective yield curve in the region Saudi Arabia UAE Iraq Qatar Iran Kuwait Oman Bahrain Alternative Financing WTI Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q WTI Brent Brent As the oil prices have declined, the MENA economies will need to look at alternative source of funding and this can be a good way to promote Fixed Income issuances by government and private players. Source: MEED, Bloomberg, KAMCO Research 58

59 SECTION 6 The Way Forward The Way Forward Sukuk issuances in the MENA region is expected to get a major boost, especially in the oil producing GCC economies, as the respective governments try to bridge the expected budget deficits driven by historical decline in oil prices. MENA Fixed Income Market Moreover, these issuances are expected to be welcomed by the local investors with adequate liquidity who are expecting stability in their portfolio risk and returns. The GCC fixed income market saw steady returns in 2014 despite heightened volatility seen in other asset classes. We expect this trend to continue in The GCC region is expected to see a number of new issues in the fixed income market powered by the upcoming infrastructure investments as well as the much needed diversification initiatives being undertaken by the governments. We expect to see more institutionalization of the MENA Fixed income markets as we expect increase in launch of new bond Funds and SUKUK Funds. We expect to see more inflows into the fixed income securities/funds of MENA Region as the investors look at the negative rates in the developed markets. Also most of the currencies in the region are pegged to USD, this reduces the currency risk for the investors while investing in fixed income securities in the MENA Region. 59

60 SECTION 7 Appendix SECTION 7 Appendix 60

61 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Algeria Bahrain Egypt Subscription End Date Issue Size ($M) Country Coupon Tenor Ministère des Finances - Algérie Algerian Treasury Bonds 26/01/ Jan Algeria 3% 7 Years Ministère des Finances - Algérie Algerian Treasury Bonds 23/02/ Feb Algeria 3.50% 10 Years Ministère des Finances - Algérie Algerian Treasury Bonds 23/03/ Mar Algeria 3.75% 15 Years Ministère des Finances - Algérie Algerian Treasury Bonds 19/10/ Jul Algeria - 1 Year 3 Months Ministère des Finances - Algérie Algerian Treasury Bonds 07/09/ Sep Algeria 1.75% 1 Year Bahrain Commercial Facilities Company BSC Bahrain Commercial Facilities Company Bond 7 20-Jan Bahrain - 5 Years Central Bank of Bahrain Bahrain Treasury Bills 20 4-Mar Bahrain 1.25% 1 Year Gulf International Bank B.S.C. GIB Bond May Bahrain 3 months SIBOR bps 5 Years Central Bank of Bahrain Bahrain Treasury Bills 21 3-Jun Bahrain 1.14% 1 Year Investcorp Bank B.S.C. Investcorp Bank Bond Jun Bahrain 4.75% 5 Years Central Bank of Bahrain Bahrain Treasury Bills 22 2-Sep Bahrain 1.03% 1 Year Ministry of Finance - Bahrain Bahrain Sovereign Bond Sep Bahrain 6% 30 Years Bahrain Commercial Facilities Company BSC Bahrain Commercial Facilities Company Bond 8 21-Oct Bahrain - 5 Years ICICI Bank Limited ICICI Bank Limited Bahrain Branch (Bond 2017) 24-Nov Bahrain 4% 3 Years Central Bank of Bahrain Bahrain Treasury Bills 23 2-Dec Bahrain - 1 Year Ministry of Finance - Egypt Treasury Bonds July 2015 Zero Coupon 7-Jan Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds January 2017 Zero Coupon 28-Jan Egypt - 3 Years Ministry of Finance - Egypt Treasury Bonds February Feb Egypt 11.90% 2 Years Ministry of Finance - Egypt Treasury Bonds February Feb Egypt 14.05% 7 Years Ministry of Finance - Egypt Treasury Bonds February 2018 II 3-Feb Egypt 12.74% 4 Years Ministry of Finance - Egypt Treasury Bonds August 2015 Zero Coupon 11-Feb Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds February Feb Egypt 14.90% 10 Years Ministry of Finance - Egypt Treasury Bonds February Feb Egypt 13.05% 5 Years Ministry of Finance - Egypt Treasury Bonds March Mar Egypt 14.10% 7 Years Ministry of Finance - Egypt Treasury Bonds March Mar Egypt 12.54% 3 Years Ministry of Finance - Egypt Treasury Bonds September 2015 Zero Coupon 4-Mar Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds October 2015 III Zero Coupon 15-Apr Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds May May Egypt 13.45% 5 Years Ministry of Finance - Egypt Treasury Bonds November 2015 Zero Coupon 13-May Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds May May Egypt 14.40% 7 Years Ministry of Finance - Egypt Treasury Bonds June Jun Egypt 15.55% 10 Years Ministry of Finance - Egypt Treasury Bonds December 2015 Zero Coupon 10-Jun Egypt - 1 Year 6 Months Ministry of Finance - Egypt Treasury Bonds June Jun Egypt 12.60% 3 Years Contact Car Trading Company S.A.E. Contact Securitization Company Bond 12th Issue (Tranche A) 24-Jun Egypt 9.24% 1 Year Contact Car Trading Company S.A.E. Contact Securitization Company Bond 12th Issue (Tranche B) 24-Jun Egypt 9.84% 3 Years Contact Car Trading Company S.A.E. Contact Securitization Company Bond 12th Issue (Tranche C) 24-Jun Egypt 10.54% 5 Years Ministry of Finance - Egypt Treasury Bonds July Jul Egypt 14.50% 7 Years Ministry of Finance - Egypt Treasury Bonds January 2016 Zero Coupon 8-Jul Egypt - 1 Year 6 Months African Export-Import Bank Afreximbank (Bond 2019) 29-Jul Egypt 4.75% 5 Years Ministry of Finance - Egypt Treasury Bonds August 2017 II 5-Aug Egypt 13.90% 3 Years Source: Zawya 61

62 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Jordan Subscription End Date Issue Size ($M) Country Coupon Tenor Central Bank of Jordan CBJ Treasury Bonds 15/ Feb Jordan 5.50% 5 Years Central Bank of Jordan CBJ Treasury Bonds 16/ Mar Jordan 4.44% 3 Years Central Bank of Jordan CBJ Treasury Bonds 17/ Mar Jordan 4.41% 3 Years Central Bank of Jordan CBJ Treasury Bonds 18/ Mar Jordan 4% 2 Years Central Bank of Jordan CBJ Treasury Bonds 19/ Mar Jordan 4.00% 2 Years Central Bank of Jordan CBJ Treasury Bonds 20/ Mar Jordan 4.00% 2 Years Central Bank of Jordan CBJ Treasury Bills 03/ Mar Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 21/ Mar Jordan 4.36% 3 Years Central Bank of Jordan CBJ Treasury Bonds 22/ Mar Jordan 5.47% 5 Years Central Bank of Jordan CBJ Treasury Bonds 23/ Mar Jordan 3.98% 2 Years Central Bank of Jordan CBJ Treasury Bills 04/ Apr Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 24/ Apr Jordan 5.43% 5 Years Central Bank of Jordan CBJ Treasury Bonds 25/ Apr Jordan 4.34% 3 Years Central Bank of Jordan CBJ Treasury Bonds 26/ Apr Jordan 5.43% 5 Years Central Bank of Jordan CBJ Treasury Bonds 27/ Apr Jordan 3.98% 2 Years Central Bank of Jordan CBJ Treasury Bonds 28/ Apr Jordan 4.32% 3 Years Central Bank of Jordan CBJ Treasury Bonds 29/ Apr Jordan 5.43% 5 Years Central Bank of Jordan CBJ Treasury Bonds 30/ Apr Jordan 4.36% 3 Years Central Bank of Jordan CBJ Treasury Bonds 31/ Apr Jordan 4.38% 3 Years Central Bank of Jordan CBJ Treasury Bonds 33/ May Jordan 5.44% 5 Years Central Bank of Jordan CBJ Treasury Bonds 34/ May Jordan 4.41% 3 Years Central Bank of Jordan CBJ Treasury Bonds 35/ May Jordan 4.08% 2 Years Central Bank of Jordan CBJ Treasury Bonds 36/ May Jordan 4.47% 3 Years Central Bank of Jordan CBJ Treasury Bonds 37/ May Jordan 5.50% 5 Years Central Bank of Jordan CBJ Treasury Bonds 38/ May Jordan 5.52% 5 Years Central Bank of Jordan CBJ Treasury Bonds 39/ May Jordan 5.56% 5 Years Central Bank of Jordan CBJ Treasury Bonds 40/ May Jordan 5.62% 5 Years Central Bank of Jordan CBJ Treasury Bonds 41/ Jun Jordan 4.52% 3 Years Central Bank of Jordan CBJ Treasury Bonds 42/ Jun Jordan 5.68% 5 Years Central Bank of Jordan CBJ Treasury Bills 05/ Jun Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 43/ Jun Jordan 5.72% 5 Years Central Bank of Jordan CBJ Treasury Bonds 44/ Jun Jordan 5.74% 5 Years Central Bank of Jordan CBJ Treasury Bonds 45/ Jun Jordan 4.55% 3 Years Ministry of Finance - Jordan Jordan Sovereign Bond 26-Jun Jordan 1.95% 5 Years Water Authority of Jordan Water Authority Bond 64 1-Jul Jordan 5.58% 5 Years Central Bank of Jordan CBJ Treasury Bills 06/ Jul Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 46/ Jul Jordan 4.19% 3 Years Central Bank of Jordan CBJ Treasury Bonds 47/ Jul Jordan 4.27% 3 Years Central Bank of Jordan CBJ Treasury Bonds 48/ Jul Jordan 3.77% 2 Years Central Bank of Jordan CBJ Treasury Bonds 49/ Jul Jordan 5.46% 5 Years Source: Zawya 62

63 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Jordan Subscription End Date Issue Size ($M) Country Coupon Tenor Central Bank of Jordan CBJ Treasury Bonds 50/ Jul Jordan 5.46% 5 Years Central Bank of Jordan CBJ Treasury Bonds 51/ Jul Jordan 5.45% 5 Years Central Bank of Jordan CBJ Treasury Bonds 52/ Jul Jordan 5.44% 5 Years Central Bank of Jordan CBJ Treasury Bonds 53/ Aug Jordan 4.22% 3 Years Central Bank of Jordan CBJ Treasury Bonds 54/ Aug Jordan 5.42% 5 Years Central Bank of Jordan CBJ Treasury Bonds 55/ Aug Jordan 5.44% 5 Years Central Bank of Jordan CBJ Treasury Bonds 56/ Aug Jordan 4.24% 3 Years Central Bank of Jordan CBJ Treasury Bonds 57/ Aug Jordan 4.25% 3 Years Central Bank of Jordan CBJ Treasury Bonds 58/ Aug Jordan 4.25% 3 Years Central Bank of Jordan CBJ Treasury Bills 07/ Aug Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 59/ Aug Jordan 5.45% 5 Years Central Bank of Jordan CBJ Treasury Bonds 60/ Aug Jordan 4.26% 3 Years Central Bank of Jordan CBJ Treasury Bonds 61/ Sep Jordan 4.28% 3 Years Central Bank of Jordan CBJ Treasury Bonds 62/ Sep Jordan 4.29% 3 Years Central Bank of Jordan CBJ Treasury Bonds 63/ Sep Jordan 3.79% 2 Years Central Bank of Jordan CBJ Treasury Bonds 64/ Sep Jordan 5.48% 5 Years Central Bank of Jordan CBJ Treasury Bonds 65/ Sep Jordan 4.31% 3 Years Central Bank of Jordan CBJ Treasury Bonds 66/ Sep Jordan 4.34% 3 Years Central Bank of Jordan CBJ Treasury Bonds 67/ Sep Jordan 5.50% 5 Years Central Bank of Jordan CBJ Treasury Bonds 68/ Sep Jordan 4.37% 3 Years Central Bank of Jordan CBJ Treasury Bills 08/ Sep Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 69/ Sep Jordan 3.82% 2 Years Central Bank of Jordan CBJ Treasury Bonds 70/ Sep Jordan 5.51% 5 Years Central Bank of Jordan CBJ Treasury Bonds 71/ Oct Jordan 3.81% 2 Years Central Bank of Jordan CBJ Treasury Bills 09/ Oct Jordan - 1 Year Central Bank of Jordan CBJ Treasury Bonds 72/ Oct Jordan 3.84% 2 Years Central Bank of Jordan CBJ Treasury Bonds 73/ Oct Jordan 5.53% 5 Years Central Bank of Jordan CBJ Treasury Bonds 74/ Oct Jordan 3.88% 2 Years Central Bank of Jordan CBJ Treasury Bonds 76/ Oct Jordan 3.91% 2 Years Central Bank of Jordan CBJ Treasury Bonds 77/ Oct Jordan 3.94% 2 Years Central Bank of Jordan CBJ Treasury Bonds 78/ Oct Jordan 3.97% 2 Years Central Bank of Jordan CBJ Treasury Bonds 79/ Nov Jordan 4.00% 2 Years Central Bank of Jordan CBJ Treasury Bonds 80/ Nov Jordan 4.01% 2 Years Central Bank of Jordan CBJ Treasury Bonds 81/ Nov Jordan 4.05% 2 Years Central Bank of Jordan CBJ Treasury Bonds 82/ Nov Jordan 5.58% 5 Years Central Bank of Jordan CBJ Treasury Bonds 83/ Nov Jordan 4.08% 2 Years Central Bank of Jordan CBJ Treasury Bonds 84/ Nov Jordan 4.10% 2 Years Central Bank of Jordan CBJ Treasury Bonds 85/ Nov Jordan 4.12% 2 Years Central Bank of Jordan CBJ Treasury Bonds 86/ Nov Jordan 4.14% 2 Years Central Bank of Jordan CBJ Treasury Bonds 87/ Nov Jordan 4.15% 2 Years Source: Zawya 63

64 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Jordan Kuwait Subscription End Date Issue Size ($M) Country Coupon Tenor Central Bank of Jordan CBJ Treasury Bonds 88/ Dec Jordan 4.18% 2 Years Central Bank of Jordan CBJ Treasury Bonds 89/ Dec Jordan 4.21% 2 Years Central Bank of Jordan CBJ Treasury Bonds 90/ Dec Jordan 4.23% 2 Years Central Bank of Jordan CBJ Treasury Bonds 91/ Dec Jordan 4.74% 3 Years Central Bank of Jordan CBJ Treasury Bonds 92/ Dec Jordan 4.24% 2 Years Central Bank of Jordan CBJ Treasury Bills 10/ Dec Jordan - 1 Year Central Bank of Kuwait CBK Treasury Bonds Jan Kuwait 1% 1 Year Kuwait Projects Company Holding K.S.C.P. Kuwait Projects Company (Holding) K.S.C (Fixed Bond 2019) 5-Feb Kuwait 4.80% 5 Years Central Bank of Kuwait CBK Treasury Bonds Feb Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Mar Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Mar Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Mar Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Apr Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Apr Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Apr Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Apr Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Apr Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds May Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds May Kuwait 1.13% 2 Years Central Bank of Kuwait CBK Treasury Bonds May Kuwait 3.13% 10 Years Central Bank of Kuwait CBK Treasury Bonds May Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Jun Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Jul Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Jul Kuwait 1% 1 Year Kuwait Energy Company K.S.C. (Closed) Kuwait Energy Company Bond Aug Kuwait 9.50% 5 Years Central Bank of Kuwait CBK Treasury Bonds Aug Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Aug Kuwait 1.13% 2 Years Central Bank of Kuwait CBK Treasury Bonds Aug Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Sep Kuwait 1% 1 Year Burgan Bank Burgan Bank Perpetual Tier 1 Bond 30-Sep Kuwait 7.25% - Central Bank of Kuwait CBK Treasury Bonds Oct Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Nov Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Dec Kuwait 1% 1 Year Central Bank of Kuwait CBK Treasury Bonds Dec Kuwait 1% 1 Year Lebanon Ministry of Finance - Lebanon The Lebanese Republic Bond (Series 72) 14-Apr Lebanon 5.80% 6 Years Morocco AXA Crédit AXA Credit Bond 2019 (Tranche A) 21-Mar Morocco 5.95% 5 Years Jet ALU Maroc Jet Alu Maroc Bond 2019 (Tranche B) 21-Mar Morocco 6.38% 5 Years Jet ALU Maroc Jet Alu Maroc Bond 2019 (Tranche C) 21-Mar Morocco 6.38% 5 Years Jet ALU Maroc Jet Alu Maroc Bond 2019 (Tranche A) 21-Mar Morocco 12 months BDT bps 5 Years AXA Crédit AXA Credit Bond 2019 (Tranche B) 21-Mar Morocco 5.95% 5 Years Source: Zawya 64

65 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Morocco Oman Subscription End Date Issue Size ($M) Country Coupon Tenor OCP OCP Bond Apr Morocco 5.63% 10 Years OCP OCP Bond Apr Morocco 6.88% 30 Years The Kingdom of Morocco Morocco Sovereign Bond Jun Morocco 3.50% 10 Years Compagnie Générale Immobilière CGI Bond 2019 (Tranche B) 27-Jun Morocco 5.22% 5 Years Compagnie Générale Immobilière CGI Bond 2019 (Tranche C) 27-Jun Morocco 12 months BDT bps 5 Years Compagnie Générale Immobilière CGI Bond 2019 (Tranche D) 27-Jun Morocco 5.22% 5 Years Douja Promotion Groupe ADDOHA Addoha Bond 2022 (Tranche A) 25-Jul Morocco - 8 Years Douja Promotion Groupe ADDOHA Addoha Bond 2022 (Tranche C) 25-Jul Morocco 5.55% 8 Years Groupe Risma Risma Bond Sep Morocco 5.87% 1 Year 6 Months Banque Marocaine du Commerce Extérieur SA BMCE Subordinated Bond Sep Morocco - 10 Years Wafasalaf S.A. Wafasalaf Bond Oct-14 - Morocco - 5 Years Zalagh Holding Zalagh Holding Bond Nov Morocco - 5 Years Société Label'Vie S.A. Label Vie Bond (Tranche G) 27-Nov Morocco 12 months BDT bps 7 Years Société Label'Vie S.A. Label Vie Bond (Tranche H) 27-Nov Morocco 4.95% 7 Years Société Label'Vie S.A. Label Vie Bond (Tranche D) 27-Nov Morocco 4.60% 5 Years Société Label'Vie S.A. Label Vie Bond (Tranche C) 27-Nov Morocco 12 months BDT bps 5 Years Fonds d'equipement Communal FEC Bond 28-Nov Morocco - 10 Years to 15 Years Banque Centrale Populaire BCP Bond Dec Morocco - 7 Years Attijariwafa Bank Attijariwafa Subordinated Bond Dec Morocco - 10 Years Al Omaniya Financial Services (SAOG) AOFS Bond Apr Oman 5% 2 Years National Bank of Oman SAOG National Bank of Oman Bond Oct Oman 3.13% 5 Years Central Bank of Oman Oman Development Bond Dec Oman 3% 5 Years Palestain Palestine Commercial Bank Palestine Commercial Bank Bond Jul Palestinian Territories 6.50% 5 Years Qatar Tunisia Qatar Central Bank Qatar Government Bond Jan Qatar - 3 Years Qatar Central Bank Qatar Government Bond Jan Qatar - 5 Years Qatar Central Bank Qatar Government Bond Jun Qatar - 7 Years Qatar Central Bank Qatar Government Bond 2017 II 15-Jun Qatar - 3 Years Qatar Central Bank Qatar Government Bond 2019 II 15-Jun Qatar - 5 Years The Commercial Bank of Qatar (Q.S.C.) CBQ Finance Limited Jun Qatar 2.88% 5 Years Tunisie Leasing Tunisie Leasing Subordinated Bond (Floating) 5-Feb Tunisia TMM bps 5 Years Tunisie Leasing Tunisie Leasing Subordinated Bond (Fixed II) 5-Feb Tunisia 7.60% 7 Years Tunisie Leasing Tunisie Leasing Subordinated Bond (Fixed I) 5-Feb Tunisia 7.35% 5 Years Hannibal Lease Hannibal Lease Bond (Fixed) 28-Feb Tunisia 7.20% 5 Years Hannibal Lease Hannibal Lease Bond (Floating) 28-Feb Tunisia TMM bps 5 Years Hannibal Lease Hannibal Lease Bond (Fixed II) 28-Feb Tunisia 7.35% 7 Years Arab Tunisian Lease ATL Bond Mar Tunisia 7.30% 5 Years Tunisie Leasing Tunisie Leasing Bond (Category B) 28-Apr Tunisia 7.35% 7 Years Tunisie Leasing Tunisie Leasing Bond (Category C) 28-Apr Tunisia TMM bps 5 Years Tunisie Leasing Tunisie Leasing Bond (Category A) 28-Apr Tunisia 7.20% 5 Years Arab Tunisian Lease ATL Bond (Category A) 19-May Tunisia TMM bps 5 Years Source: Zawya 65

66 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Appendix Country Issuer Name Bond Name Tunisia UAE Subscription End Date Issue Size ($M) Country Coupon Tenor Arab Tunisian Lease ATL Bond (Category C) 19-May Tunisia 7.35% 7 Years Arab Tunisian Lease ATL Bond (Category B) 19-May Tunisia 7.20% 5 Years Attijari Leasing SA Attijari Leasing Bond (Category B) 5-Jun Tunisia 7.35% 7 Years Attijari Leasing SA Attijari Leasing Bond (Category C) 5-Jun Tunisia 7.20% 5 Years Compagnie Internationale de Leasing CIL Bond (Tranche B) 15-Jul Tunisia TMM bps 5 Years Compagnie Internationale de Leasing CIL Bond (Tranche A) 15-Jul Tunisia 7.20% 5 Years Banque Centrale de Tunisie Tunisia Sovereign Bond Jul Tunisia 2.45% 7 Years Arab International Lease AIL Bond (Fixed Tranche) 31-Jul Tunisia 7.30% 5 Years Arab International Lease AIL Bond (Floating Tranche) 31-Jul Tunisia TMM bps 5 Years Banque Centrale de Tunisie Tunisia Samurai Bond Oct Tunisia 1.61% 10 Years Hannibal Lease Hannibal Lease Bond Oct Tunisia - 5 Years to 7 Years Tunisie Leasing Tunisie Leasing Bond Dec Tunisia 7.55% 5 Years to 7 Years Banque Tuniso-Koweïtienne BTK Subordinated Bond Dec Tunisia - 5 Years to 7 Years Attijari Leasing SA Attijari Leasing Subordinated Bond (Category B) 26-Dec Tunisia 7.75% 7 Years Attijari Leasing SA Attijari Leasing Subordinated Bond (Category A) 26-Dec Tunisia 7.50% 5 Years Attijari Leasing SA Attijari Leasing Subordinated Bond (Category C) 26-Dec Tunisia TMM bps 5 Years Emirates NBD PJSC ENBD Bond (Series 203) 21-Jan UAE 1.43% 1 Year Mashreq Bank PSC Mashreq Bank Bond (Fixed 2017) 6-Feb UAE 2.75% 3 Years Mashreq Bank PSC Mashreq Bank Bond (Fixed 2015) 20-Feb UAE 1.45% 1 Year Abu Dhabi Commercial Bank ADCB Finance Limited Bond (2019) 24-Feb UAE 3% 5 Years Emirates NBD PJSC ENBD Bond (Series 206) 25-Feb UAE 1.40% 1 Year National Bank of Abu Dhabi PJSC NBAD AUD Bond Mar UAE 4.75% 5 Years Emirates NBD PJSC ENBD Bond (Series 211) 31-Mar UAE 3 months LIBOR bps 10 Years First Gulf Bank Q.S.C First Gulf Bank Bond (AUD 2019) 1-Apr UAE 5% 5 Years Emirates NBD PJSC ENBD Bond (Series 213) 2-Apr UAE 1.40% 1 Year Emirates NBD PJSC ENBD Bond (Series 216) 15-Apr UAE 1.36% 1 Year Mubadala Development Company PJSC Mubadala GMTN Bond (2022) 28-Apr UAE 3.25% - Abu Dhabi National Energy Company PJSC Taqa Bond May UAE 3.88% 10 Years Majid Al Futtaim Properties LLC MAF Bond May UAE 4.75% 10 Years Emirates NBD PJSC ENBD Bond (AUD 2019) 8-May UAE 5.75% 5 Years Investment Corporation of Dubai Investment Corporation of Dubai Bond May UAE 4.63% 10 Years Emirates NBD PJSC ENBD Bond (Series 219) 27-May UAE 1.24% 1 Year Mashreq Bank PSC Mashreq Bank Bond (Fixed June 2015) 12-Jun UAE 1.30% 1 Year Emirates Telecommunications Corporation Etisalat Bond (2019, USD) 18-Jun UAE 2.38% 5 Years Emirates Telecommunications Corporation Etisalat Bond (2021, EUR) 18-Jun UAE 1.75% 7 Years Emirates Telecommunications Corporation Etisalat Bond (2026, EUR) 18-Jun UAE 2.75% 12 Years Emirates Telecommunications Corporation Etisalat Bond (2024, USD) 18-Jun UAE 3.50% 10 Years DP World Limited DP World Convertible Bond Jun UAE 1.75% 10 Years The National Bank of Ras Al-Khaimah (P.S.C.) RAKBANK Bond (2019) 24-Jun UAE 3.25% 5 Years Mashreq Bank PSC Mashreq Bank Bond (Fixed June 2016) 25-Jun UAE 2.06% 2 Years Source: Zawya 66

67 SECTION 7 Appendix Appendix A MENA Bond Issuances in 2014 Country Issuer Name Bond Name UAE Subscription End Date Issue Size ($M) Country Coupon Tenor First Gulf Bank Q.S.C First Gulf Bank Bond (JPY 2019) 3-Jul UAE 0.86% 5 Years Mashreq Bank PSC Mashreq Bank Bond (Floating August 2016) 7-Aug UAE 3 months LIBOR + 85 bps 2 Years Mashreq Bank PSC Mashreq Bank Bond (Fixed November 2015) 27-Aug UAE 1.33% 1 Year 3 Months Abu Dhabi Commercial Bank ADCB Finance Limited Bond (Zero Coupon 2044) 9-Sep UAE - 30 Years Agricultural Bank of China Limited Dubai Branch ABC Limited Bond (September 2017) 11-Sep UAE 3.50% 3 Years Abu Dhabi Commercial Bank ADCB Finance Limited Bond (September 2019) 15-Sep UAE 2.75% 5 Years Emirates NBD PJSC ENBD Perpetual Bond II 17-Sep UAE 6.38% - HSBC Bank Middle East Limited HSBC Bank Middle East Bond (October 2019) 1-Oct UAE 2.75% 5 Years Emirates NBD PJSC ENBD Bond (NZD, 2019) 8-Oct UAE 6% 5 Years Emirates NBD PJSC ENBD Bond (EUR, 2026) 10-Nov UAE 3% 12 Years Mubadala GE Capital Mubadala GE Capital Bond (2019) 10-Nov UAE 3% 5 Years Emirates NBD PJSC ENBD Bond (USD, 2015) 13-Nov UAE 1.22% 1 Year Emirates NBD PJSC ENBD Bond (USD, 2019) 19-Nov UAE 3.25% 5 Years Emirates NBD PJSC ENBD Bond (Series 251) 21-Nov UAE 0.47% 1 Year Appendix Source: Zawya 67

68 SECTION 7 Appendix Appendix B MENA Bond Pipeline Issuer Name Bond Name Issue Size ($M) Country Coupon Tenor Status Bahrain Mumtalakat Holding Company Mumtalakat EMTN Bond 1,000 Bahrain - 30 Years Announced Central Bank of Bahrain Bahrain Treasury Bills Bahrain - 1 Year Rumored National Bank of Egypt National Bank Of Egypt Bond 600 Egypt - - Announced Ministry of Finance - Egypt Egypt Eurobond 1,500 Egypt - - Announced Golden Pyramids Plaza Company S.A.E Golden Pyramids Plaza Bond (Tranche 1) 280 Egypt LIBOR bps 5 Years Rumored Central Bank of Iraq Iraq Domestic Bond Iraq - - Rumored Ministry of Finance - Lebanon Lebanon Eurobond 1,500 Lebanon - 16 Years Rumored Appendix Central Bank of Libya Libya Sovereign Bond - Libya - - Announced The Kingdom of Morocco Morocco Bond - Morocco - - Announced Central Bank of Oman Oman Bond 779 Oman - - Rumored Bank Sohar S.A.O.G. Bank Sohar Convertible Bond 182 Oman - - Announced Qatar Insurance Company S.A.Q. QIC Convertible Bond 250 Qatar - 5 Years Rumored The Commercial Bank of Qatar (Q.S.C.) CBQ Perpetual Bond 549 Qatar - - Announced Saudi Arabian Airlines Saudi Arabian Airlines - Saudi Arabia - - Announced Drake and Scull International PJSC Drake and Scull Convertible Bond 15 UAE - - Announced Arabtec Holding PJSC Arabtec Holding Bond 450 UAE - - Rumored Emirates Airline Emirates Airline Bond - UAE - - Announced National Central Cooling Company PJSC Tabreed Bond 308 UAE - - Announced Dubai Holding Commercial Operations Group DHCOG Bond - UAE - - Announced First Gulf Bank Q.S.C First Gulf Bank Bond - UAE - - Announced Source: Zawya 68

69 SECTION 7 Appendix Appendix C MENA SUKUK Issuances in 2014 Appendix Country Issuer Name Sukuk Name Sukuk Structure Country Currency Subsc. Date Bahrain Qatar Saudi Arabia Central Bank of Bahrain CBB Short Term Sukuk 101 Ijarah Bahrain BHD 14-Jan % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 153 Al Salaam Bahrain BHD 20-Jan % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 102 Ijarah Bahrain BHD 11-Feb % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 154 Al Salaam Bahrain BHD 24-Feb % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 103 Ijarah Bahrain BHD 18-Mar % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 155 Al Salaam Bahrain BHD 24-Mar % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 104 Ijarah Bahrain BHD 15-Apr % 182 Days Central Bank of Bahrain Al Salaam Sukuk #156 Al Salaam Bahrain BHD 21-Apr % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 105 Ijarah Bahrain BHD 13-May % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 157 Al Salaam Bahrain BHD 26-May % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 106 Ijarah Bahrain BHD 17-Jun % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 158 Al Salaam Bahrain BHD 23-Jun % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 107 Ijarah Bahrain BHD 15-Jul Months Central Bank of Bahrain Al Salaam Sukuk # 159 Al Salaam Bahrain BHD 21-Jul Days Central Bank of Bahrain CBB Short Term Sukuk 108 Ijarah Bahrain BHD 12-Aug % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 160 Al Salaam Bahrain BHD 25-Aug % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 109 Ijarah Bahrain BHD 16-Sep % 182 Days Central Bank of Bahrain Gambia Al Salaam Sukuk Al Salaam Bahrain GMD 17-Sep % 91 Days Central Bank of Bahrain Al Salaam Sukuk # 161 Al Salaam Bahrain BHD 22-Sep % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 110 Ijarah Bahrain BHD 14-Oct % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 162 Al Salaam Bahrain BHD 22-Oct % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 111 Ijarah Bahrain BHD 11-Nov % 182 Days Mumtalakat Sukuk Holding Company Mumtalakat Holding Sukuk 2021 Murabaha Bahrain USD 17-Nov % 7 Years Central Bank of Bahrain Al Salaam Sukuk # 163 Al Salaam Bahrain BHD 24-Nov % 91 Days Central Bank of Bahrain CBB Short Term Sukuk 112 Ijarah Bahrain BHD 15-Dec % 182 Days Central Bank of Bahrain Al Salaam Sukuk # 164 Al Salaam Bahrain BHD 22-Dec % 91 Days Qatar Central Bank Qatar Government Sukuk ( ) Ijarah Qatar QAR 16-Jan-14 1, Years Qatar Central Bank Qatar Government Sukuk ( ) Ijarah Qatar QAR 16-Jan-14 1, Years Saudi Electricity Company Saudi Electricity Company Sukuk IV Al-Istithmar Saudi Arabia SAR 23-Jan-14 1, months SIBOR + 70 bps 10 Years National Commercial Bank NCB Subordinated Tier II Sukuk Modarabah Saudi Arabia SAR 19-Feb-14 1, months SIBOR bps 10 Years IDB Trust Services Limited Islamic Development Bank MTN Sukuk(Series 16) Al-Wakala Bel-Istithmar Saudi Arabia USD 9-Mar-14 1, % 5 Years Saudi Electricity Global SUKUK Co. 3 Saudi Electricity Global Sukuk III(Tranche 2) Ijarah Saudi Arabia USD 1-Apr-14 1, % 30 Years Saudi Electricity Global SUKUK Co. 3 Saudi Electricity Global Sukuk III(Tranche 1) Ijarah Saudi Arabia USD 1-Apr-14 1,500 4% 10 Years Dar Al-Arkan Sukuk Company DAAR Sukuk V(Tranche 3) Wakala Saudi Arabia USD 21-May % 5 Years The Saudi Investment Bank Saudi Investment Bank Sukuk Modarabah-Murabaha Saudi Arabia SAR 5-Jun months SIBOR bps 10 Years Saudi Telecom Company Saudi Telecom Sukuk Modarabah-Murabaha Saudi Arabia SAR 10-Jun months SIBOR + 70 bps 10 Years Banque Saudi Fransi Banque Saudi Fransi Tier 2 Sukuk Modarabah-Murabaha Saudi Arabia SAR 18-Jun months SIBOR bps 10 Years Fawaz Alhokair Group Alhokair Sukuk Modarabah-Murabaha Saudi Arabia SAR 19-Jun Years National Petrochemical Company - Saudi Arabia National Petrochemical Company (Petrochem) Sukuk Al-Istithmar Saudi Arabia SAR 23-Jun months SIBOR bps 5 Years IDB Trust Services Limited Islamic Development Bank MTN Sukuk(Series 18) Al-Wakala Bel-Istithmar Saudi Arabia USD 17-Jul-14 1, % 5 Years Issue Size ($M) Margin Tenor Source: Zawya 69

70 SECTION 7 Appendix Appendix C MENA SUKUK Issuances in 2014 Country Issuer Name Sukuk Name Sukuk Structure Country Currency Subsc. Date Saudi Arabia UAE IDB Trust Services Limited Islamic Development Bank MTN Sukuk(Series 19) Al-Wakala Bel-Istithmar Saudi Arabia USD 18-Sep-14 1, % 5 Years IDB Trust Services Limited Islamic Development Bank MTN Sukuk(Series 20) Al-Wakala Bel-Istithmar Saudi Arabia EUR 31-Oct Years Advanced Petrochemical Company Advanced Petrochemical Sukuk Modarabah-Murabaha Saudi Arabia SAR 17-Nov Years DIP Sukuk Limited Dubai Investments Park Sukuk Wakala UAE USD 13-Feb % 5 Years Alpha Star Holding Limited Damac Sukuk Ijarah UAE USD 1-Apr % 5 Years Dubai DOF Sukuk Limited Dubai DOF Sukuk(2029) Ijarah UAE USD 23-Apr % 15 Years ICD Sukuk Company Limited Investment Corporation of Dubai Sukuk Ijarah UAE USD 14-May % 6 Years EMG Sukuk Limited Emaar Malls Group Sukuk Wakala UAE USD 18-Jun % 10 Years AHB Tier 1 Sukuk AHB Tier 1 Sukuk Modarabah UAE USD 24-Jun % - Sharjah Sukuk Limited Sharjah Sovereign Sukuk Ijarah UAE USD 17-Sep % 10 Years DIFC Sukuk Limited DIFC Investments Sukuk Wakala UAE USD 5-Nov % 10 Years DSI Sukuk Limited Drake & Scull International Sukuk Murabaha UAE USD 12-Nov months LIBOR 5 Years Al Shindagha Sukuk Limited Flydubai Sukuk 2019 Wakala UAE USD 14-Nov % 5 Years Issue Size ($M) Margin Tenor Appendix Source: Zawya 70

71 SECTION 7 Appendix Appendix D MENA SUKUK Pipeline Issuer Name Sukuk Name Country Currency Issue Size ($M) Margin Tenor Status Appendix Al Baraka Sukuk Al Wakala Co. Al Baraka Sukuk Al Wakala Bahrain USD 200 6% 18 Months Rumored Gulf Finance House BSC Gulf Finance House Sukuk Bahrain USD Announced Gulf Sukuk I Company GIB IMTN Sukuk Bahrain MYR Announced Emaar Misr for Development S.A.E. Emaar Misr Sukuk Egypt EGP Announced Ministry of Finance - Egypt Egypt Sovereign Sukuk Egypt USD 2, Years Announced Jordanian Government Jordan Sovereign Sukuk Jordan JOD Announced Mobile Telecommunications Company K.S.C.P ZAIN Sukuk Kuwait KWD Announced Central Bank of Libya Libya Sovereign Sukuk Libya USD Announced Government of Morocco Morocco Sovereign Sukuk Morocco Announced Central Bank of Oman Oman Sukuk Oman OMR Announced BankMuscat S.A.O.G. Bank Muscat Meethaq Sukuk Oman OMR Announced QIIB Sukuk Funding Ltd (QSF) QIIB Sukuk Qatar USD 2, Announced The National Shipping Company of Saudi Arabia Bahri Sukuk Saudi Arabia Rumoured Ministry of Finance - Saudi Arabia Saudi Taif Airport Sukuk Saudi Arabia SAR Announced Jeddah Economic Company Ltd. Jeddah Economic Co Sukuk Saudi Arabia SAR Announced Red Sea Housing Services Company Red Sea Housing Services Company Sukuk Saudi Arabia SAR Announced Saudi Basic Industries Corporation SABIC Sukuk IV Saudi Arabia Announced Kingdom Holding Company Kingdom Holding Company Sukuk Saudi Arabia SAR Rumoured Saudi Arabian Airlines Saudi Arabian Airlines Sukuk Saudi Arabia SAR Rumoured Al Othaim Real Estate Investment and Development Company Al Othaim Real Estate and Investment Company Sukuk Saudi Arabia SAR Announced Industrial Bank of Korea (IBK) Industrial Bank of Korea Sukuk South Korea MYR Rumoured Banque Centrale de Tunisie Tunisia Sovereign Sukuk Tunisia USD 1, Rumoured Emirate of Fujairah Emirate of Fujairah Sukuk UAE USD Announced Emirates NBD Capital Limited Emirates NBD IMTN Sukuk UAE MYR Announced Islamic Development Bank IDB Short Term Sukuk UAE Rumoured FGB Sukuk Company Limited II FGB Sukuk II UAE MYR Announced Emirates Telecommunications Corporation Etisalat International Sukuk UAE USD Announced Central Bank of Yemen Yemen Salam Sukuk II Yemen YER Years to 5 Years Announced Source: Zawya 71

72 Contact List Investment Research Team Faisal Hasan, CFA SVP, Head of Investment Research +(965) Wassim El-Hayek, CVA Vice President +(965) Client Relations Team Sana Al- Hadlaq SVP, Head of Client Relationship & Marketing Dept. +(965) Salem S. Jeiroudi Vice President +(965) Ziad Chehab, MBA, CVA Vice President +(965) Junaid Ansari, MBA Senior Financial Analyst +(965)

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74 Disclaimer & Important Disclosures Nothing in this document should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction, or to provide any investment advice or service. This document is directed at Professional Clients and not Retail Clients within the meaning of CMA rules. Any other persons in receipt of this document must not rely upon or otherwise act upon it. Entities and individuals into whose possession this document comes are required to inform themselves about, and observe such restrictions and should not rely upon or otherwise act upon this document where it is unlawful to make to such person such an offer or invitation or recommendation without compliance with any authorization, registration or other legal requirements. Risk Warnings Any prices, valuations or forecasts are indicative and are not intended to predict actual results, which may differ substantially from those reflected. The value of an investment may go up as well as down. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including, without limitation, foreseeable or unforeseeable changes in interest rates, foreign exchange rates, default rates, prepayment rates, political or financial conditions, etc.). Past performance is not indicative of future results. Any opinions, estimates, valuations or projections (target prices and ratings in particular) are inherently imprecise and a matter of judgment. They are statements of opinion and not of fact, based on current expectations, estimates and projections, and rely on beliefs and assumptions. Actual outcomes and returns may differ materially from what is expressed or forecasted. There are no guarantees of future performance. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. This document does not propose to identify or to suggest all of the risks (direct or indirect) which may be associated with the investments and strategies referred to herein. Conflict of Interest KAMCO and its affiliates provide full investment banking services, and they and their directors, officers and employees, may take positions which conflict with the views expressed in this document. Salespeople, traders, and other professionals of KAMCO may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this document. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this document. KAMCO may have or seek investment banking or other business relationships for which it will receive compensation from the companies that are the subject of this document. Facts and views presented in this document have not been reviewed by, and may not reflect information known to, professionals in other KAMCO business areas, including investment banking personnel. United Gulf Bank, Bahrain owns majority of KAMCO s shareholding and this ownership may create, or may create the appearance of, conflicts of interest. No Liability & Warranty KAMCO makes neither implied nor expressed representations or warranties and, to the fullest extent permitted by applicable law, we hereby expressly disclaim any and all express, implied and statutory representations and warranties of any kind, including, without limitation, any warranty as to accuracy, timeliness, completeness, and fitness for a particular purpose and/or non-infringement. KAMCO will accept no liability in any event including (without limitation) your reliance on the information contained in this document, any negligence for any damages or loss of any kind, including (without limitation) direct, indirect, incidental, special or consequential damages, expenses or losses arising out of, or in connection with your use or inability to use this document, or in connection with any error, omission, defect, computer virus or system failure, or loss of any profit, goodwill or reputation, even if expressly advised of the possibility of such loss or damages, arising out of or in connection with your use of this document. We do not exclude our duties or liabilities under binding applicable law. 74

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